Future Imperfect, Part III

Buy stock in newspapers, weep for America

NEW YORK—In his book The Vanishing Newspaper, Philip Meyer predicts that 2043 will mark the death of printed newspapers in the United States, "as the last exhausted reader tosses aside the last crumpled edition."

Not a chance.

Media companies report that their Internet editions are newspapers' fastest-growing sources of revenue. But the Web isn't why I'm bullish about the industry.

First, there is no Internet—not one that makes money for newsmongers. "Newspapers are growing the amount of revenue they derive from their Web operations," reports E-Commerce Times, but "that revenue stream is growing too slowly to replace the losses represented by plunging circulation."

Merrill Lynch estimates that online ads generate 7 percent of newspaper income. The firm's media analysts say it'll take at least 30 more years before it accounts for half—and that's assuming current trends continue. They never do.

Second, print is all there is. The pessimists aren't crazy: A Pew poll finds that only 23 percent of Americans under 30 read a daily newspaper, compared with 60 percent of old codgers. Circulation is down 2.6 percent since 2006, continuing a trend that began in the 1990s; 1.2 million people canceled their subscriptions last year alone! Those are scary numbers. But Internet-evangelist hype aside, print accounts for 93 percent of newspaper revenue over a decade after newspapers committed to online.

"Print is dead," Sports Illustrated president John Squires told newspaper and magazine execs in 2004. "Get over it" and embrace the Internet, he counseled. But not everyone is ready to abandon a sure thing (albeit one in crisis) for a pipe dream. "It depends on a particular person's view as to whether the industry is going through a rather difficult transition from which it will emerge stronger, or whether things are really in a long-term decline," says Rick Edmonds, a newspaper industry analyst at the Poynter Institute.

Smart newspaper publishers understand that Web 2.0 is faith-based. At most, the Internet is a way to promote their print editions. "It's ... possible to get online readers to buy the printed version by trailing stories selectively between online and offline editions," says Viviane Reding, the European Commissioner for Information, Society and Media.

Third, some types of papers are prospering and growing. I believe that the business of printing news on dead trees will emerge from the current shakeout more profitable than ever. This will be thanks to three emerging trends:

• Big national newspapers

• More small local papers

• Freebie dailies

At present, the biggest 50 dailies ("A" papers, in industry jargon) dominate the landscape. Below them is a swath of dailies in midsize cities (Akron, Austin, Albuquerque). Small town, suburban and rural dailies, weeklies and biweeklies, whose focus is highly localized ("New stop sign stirs controversy")—the "C"s—bring up the rear.

During the 20th century, most newspaper profits were generated by "B" papers. This is the market segment that has been hit hardest by the Web. Free online classifieds have decimated advertising revenues. Neither beast nor fowl, the midsize dailies' attempt to balance local, national and international coverage pleases no one in an environment where highly customized news consumption is available to readers online—for free. (Publishers were idiots for giving away their content, but that's another column.) MyYahoo feeds me the latest headlines from Itar-Tass and Agence France-Press every morning; how could the Dayton Daily News, the paper of my childhood, do as well for this half-Frenchman with a Central Asia obsession?

Amid the falling circulation numbers, there are notable exceptions. The three large national papers (The New York Times, Wall Street Journal and USA Today) frequently post circulation gains. Their strategies differ: The Times and Journal offer a must-read experience to those who depend on information for their careers, whereas USA Today is a convenient digest for conventioneers rushing to snag a free croissant at the conference center.

In 20 years, the U.S. newspaper landscape will look more like Europe and Japan. The market will be dominated by two major segments. At the top, we'll find a small cluster, perhaps 10 or 15, of huge national titles—papers such as The New York Times and USA Today will get even bigger. Existing papers (The Washington Post?) will expand; new ones will launch.

At the bottom will be a growing number of tiny weekly and biweeklies whose low overhead makes them viable and whose local focus makes them essential reading. Middle-market dailies in midsize "B" cities—Hartford, Salt Lake City, Daytona Beach, etc.—will vanish or, in most cases, radically contract.

Freebie dailies are luring readers whom the old-school A and B papers have written off. If papers like AMNewYork are short on depth, they're convenient. These stripped-down mini-USA Todays are designed to be read in under 30 minutes—the length of a typical commute—and tossed. "Our free papers provide young people with something new and different: speedy news and bite-size information, which means they can keep up to speed with a minimum of fuss," says Steve Auckland, head of the free newspaper division at the publisher of Metro's London edition.

Stefano Hatfield is the former editor of the New York edition of Metro, a slim, daily given away to subway riders. "This is a generation who grew up with the World Wide Web," he says of the papers' target audience, aged 18 to 35. "It is difficult to persuade young people that news should be something you pay for." There are Metro editions in Boston and Philadelphia. The Examiner chain has Washington, Baltimore and San Francisco. Chicago has Red Eye. Freebie dailies will spread to cities without integrated mass-transit systems as they learn to distribute to shopping centers, corporate parks, college campuses and motorists stuck in traffic.

None of this will improve the quality of journalism. "Ultimately, [free dailies] will breed in people the idea that news shouldn't cost anything, even that news is cheap," points out media commentator Roy Greenslade. "But in fact, news, done well and properly, requires investment and money. They will no doubt tell us what happened—but news should also tell us how and why things happen. I fear that approach will be lost."

It will. It's a trend that began decades ago, when newspapers closed overseas news bureaus and eliminated long-term investigative journalism to cut costs, and started embracing elites rather than exposing them. And it's terrible for our society, culture and politics. Government and business will face even less accountability than they do today. Democracy will lie in ruins. The print newspaper business, however, will be going gangbusters.

Ted Rall is the author of the book Silk Road to Ruin: Is Central Asia the New Middle East?, an in-depth prose and graphic novel analysis of America's next big foreign policy challenge.